== ATTENTION -sinking of rebel boats ///
Tiger rebels shelled Sri Lanka's main navy base Tuesday, killing four sailors and wounding 30, while warplanes bombed guerrilla positions as a bloody battle for a disputed waterway entered a seventh day.
The rebel Liberation Tigers of Tamil Eelam (LTTE) used 122-millimeter artillery to target the base at Trincomalee as a ferry carrying 854 troops was about to dock there, the military said.
"The 'Jetliner' ferry was making its way to the harbour when the… attack started," a military official said.
He said five rebel boats pursued the ferry carrying troops returning home on leave but navy gunboats were able to sink three of them, inflicting unspecified casualties on the guerrillas.
Ground troops also used multi-barrel rocket launchers to neutralise rebel gun positions.
"Four naval ratings were killed and about 30 injured," the military official said on condition of anonymity. "Several buildings caught fire and we are putting them out."
At least 36 explosions were heard from within the naval compound next to the main Trincomalee harbour. The blasts damaged a navy gunboat, official sources said.
The Tigers had fired both artillery and mortar bombs, officials said.
Warplanes swung into action for the second time Tuesday following the attack on the base, after bombing Tiger positions earlier in the day in the same region, the defence ministry said.
Officials said Israeli-built Kfir jets had carried out bombing sorties around dawn Tuesday near the Maavilaru irrigation canal in Trincomalee district. The rebels blocked the waterway 10 days ago, sparking bitter fighting.
The ground offensive against the Tigers was at its bloodiest on Monday claiming at least 67 lives on both sides and making a mockery of a ceasefire in force since February 2002.
"We can't say how long it will take for us to open the sluice gates," government spokesman Keheliya Rambukwella told reporters. "We have to move very cautiously."
The military has said it suspects the area is heavily mined and booby-trapped.
Rambukwella said troops were engaged in "consolidation" Tuesday while continuing long-range artillery attacks against Tiger targets.
On Monday night the rebels were held responsible for blowing up a bus transporting reinforcements to the Maavilaru area, killing 19 soldiers.
It was the biggest single loss for security forces in a roadside bombing since they entered into the truce with the LTTE.
Despite the new surge in violence, international truce monitors said they still believed that neither side wanted to re-ignite the Tamil separatist war that has claimed over 60,000 lives in the past three decades.
"I still don't believe in a full-scale war," Ulf Henriccson, the retired Swedish general who leads the Sri Lanka Monitoring Mission (SLMM), told journalists on Monday.
The Tigers have accused the government of pushing the nation to the brink of war with the new offensive, and have also vowed to resist any attempts to retake the waterway.
In a further threat to the truce, the LTTE has demanded that monitors from European Union members Finland, Denmark and Sweden leave the island after the EU added it to a list of "terrorist" organisations in May.
That would leave only Norwegian and Icelandic monitors.
Sweden announced Tuesday it would recall its ceasefire monitors, following similar announcements by Finland and Denmark on Friday.
Rambukwella had earlier said the withdrawal of the monitors amounted to encouraging terrorism.
The Tamil Tigers have been waging a violent campaign since the 1970s to win an independent homeland in the northeast for the minority Tamil population.
